Government gazettes new revenue proposals

Government of Sri Lanka

The government has gazetted a series of amendments to the Finance Act to give effect to several revenue proposals in the budget 2018, including taxes on cellular towers, luxury motor vehicles, vehicle entitlement and carbon emissions.

Further taxes have been slapped on annual renewal of company registrations while all financial institutions have been called to pay a Debt Repayment Levy in a bid to reduce the country’s debt burden.

According to the gazette notification issued last Friday, the mobile phone services companies will have to pay Rs.200,000 per year for every tower they own on a quarterly basis in four equal instalments from January 1, 2019.

The telco operators had lobbied against this proposal at the time it was proposed saying that it could possibly result in major foreign investors in the local telco sector exiting the market.
Nearly 6,750 towers are used by the five mobile operators to support the needs of a population of 20 million. In April this year, Hutch and Etisalat announced a merger, which will result in the number of operators in the market coming down to four.

Meanwhile, any assembled or unassembled diesel motor vehicle of which cylinder capacity exceeds 2,300cc or a petrol motor vehicle of which the cylinder capacity exceeds 1,800cc or an electric vehicle of which motor power of the engine exceeds 200 kW will be liable for ‘Luxury Tax,’ which should be paid at the time of importation to the Director General of Customs.

This one-time tax will not be applicable to vehicles imported by diplomatic missions and dual-purpose petrol vehicles with the cylinder capacity not exceeding 2,200cc.

A tax called  ‘Vehicle Entitlement Levy’ has also been slapped on every importer of motor vehicles while a ‘Carbon Tax’, as proposed in the Budget 2018, will be levied on motor vehicles based on their age and fuel type.

Electric vehicles are exempt from the tax. The vehicle owner should pay the tax for every year other than for the first year of registration of the motor vehicle to the Divisional Secretary, on or before the due date of renewal of annual registration.

Meanwhile, amendments to the Finance Act also propose to impose an ‘Annual Company Registration Levy’ for every company incorporated or registered under the Companies Act.

A public listed company will be charged a fee of Rs.1.5 million on annual company registration while a private company will have to pay Rs.300,000.  However, this tax will not be applicable to off-shore and limited by guarantee companies.

The amendments to Finance Act further propose to slap a 7 per cent ‘Debt Repayment Levy’ on financial institutions that will be charged for every month commencing from the date of commencement of the act, on the value addition attributable to the supply of financial services by these institutions.

A levy of 25 cents has also been proposed on each mobile short message (SMS) on bulk advertisement through SMS.

The amendments to the Finance Act are to be presented to Parliament for first reading shortly.

(Source: Daily Mirror)